A subtle shift in power has recently taken place on the street in Jerusalem. The confrontations during the past week between Palestinians and the Israeli police over perceived Israeli threats to the Dome of the Rock and al-Aqsa mosque bring home the growing role of the Israeli Islamic movement in the politics of the city. As a result of the ineffectiveness of the secular and traditional Palestinian leadership, below the radar, Palestinians in the city are being mobilised by the northern branch of the Islamic Movement in Israel, led by the charismatic Sheikh Ra'ed Salah.

The emergence of this Islamic renaissance cuts across an opposite and equally problematic current in Israeli circles, creating an even more volatile situation in the city. As a result of the protracted standoff between the Israeli and US governments over the exact nature of a settlement freeze, there has been a renewed determination and energy in activities by both government and Israeli settlers, which will consolidate the Israeli control over the city.

Most observers of developments in the city agree that the transformation of Israeli settlers from outriders of the radical right in Israel to mainstream politicians has been one of the most significant events in the city over the past decade. Their funding by state institutions, and their penetration of government bodies such as the Israel Antiquities Authority (with responsibility over excavations and renovations) and the Israel Nature and Parks Authority, have provided them with a platform to act with impunity and renewed ambition. One result of this mainstreaming is that even if there are divisions over the future of settlements in the West Bank, there is a much broader consensus in the Israeli public over holding on to Israeli gains in east Jerusalem. The fractious Israeli coalition under prime minister Binyamin Netanyahu is able to exploit this trend to shore up its fragility.

There is a growing sense among Palestinians – Muslim and Christian alike – that Israel is about to pass beyond the point of no return in its polices in Jerusalem and that a line has to be drawn. The undermining of the Islamic presence in the city through activities such as house and land acquisitions, excavations, reconstructions, the establishment of temporary exclusion zones and the neutralisation of former Palestinian allies in agencies such as Unesco, combined with the impact of the separation barrier and house demolitions, has heightened the pressure on Palestinian residents. There is also an awareness that Palestinian Authority leadership based in Ramallah is unable to help them and that the Israeli government has successfully marginalised Hamas activists in the city.

Into this maelstrom Salah has stepped in like some deus ex machina with his "al-Aqsa is in danger" campaign and has become the pre-eminent Islamic defender of the contested site. An initial convention in Umm al-Fahm has now evolved into an annual rally, drawing around 50,000 supporters and inspiring similar solidarity events across the Arab and Islamic world, from Lebanon to South Africa.

This is extended by subsidised trips to al-Aqsa for Palestinians in Israel, with more than 2 million visits to the site since 2001. Further campaigns under Ra'ad Salah's leadership included renovation of the subterranean prayer halls in the south-east corner of the Haram al-Sharif compound in which al-Aqsa mosque lies.

Although Israeli permission for maintenance work at the halls had been granted to the Waqf authorities, the Islamic movement led the way in mobilising funds, supplying volunteers and helping to transform the site into one of the largest mosques in the world. For Salah, the scheme greatly enhanced both the sheikh's standing as an Israeli Palestinian leader and his position as a global Islamic figure. In the words of a former PA adviser, "the Marwani halls were Salah's gateway to Jerusalem".

Less well-known in the west has been the Islamic movement's involvement in the campaign against the plans of the Simon Wiesenthal Centre to build a Museum of Tolerance partially covering an ancient Muslim cemetery, Mamilla. The Islamic movement once again led the way in mobilising street demonstrations and pursuing a legal injunction through the Israeli court system.

According to Salah, the very name, Museum of Tolerance, "illustrates their utter disdain. They have raped our holy places in the name of tolerance … This resolution is a serious violation of all the holy sites and not only to one cemetery." Although this legal case ultimately resulted in failure for the movement, it consolidated its reputation and leadership among many Jerusalemites, able to challenge Israel's urban planning schemes for Jerusalem. This has provided Salah a platform to be in the forefront of the recent confrontations.

An important dimension to these campaigns is the projection of the struggle on to the global scene. By its use of different media, the Islamic Movement has positioned itself as a key agent in both the struggle on the ground and the regional and international debates over al-Aqsa and the status of Jerusalem. Some senior PA officials now recognise that Salah's public speeches and activities within Jerusalem have an impact upon their scope for negotiation and will undoubtedly influence future policy.

In the words of one such official, "This self-appointed sheikh of al-Aqsa has built his own kingdom within Jerusalem. He is seeking to capture the hearts and minds of Jerusalemites as victory in Jerusalem offers him the greatest platform to Islamic victory in the Arab world." Such perceptions of the ambition of the Islamic Movement indicate the high stakes that are being played out in the city.